American Elephants

Jobs Are Not an Important Consideration to This President! by The Elephant's Child

The United States Department of Agriculture has delayed shale gas drilling in Ohio for up to six months, as a bow to environmentalists. They cancelled a mineral lease auction for Wayne National Forest (WNF). The move, reported the Washington Examiner, was taken in deference to environmentalists, on the pretext of studying the effects of hydraulic fracturing. (Hydraulic fracturing has been studied extensively and found safe, for many years).

Doc Hastings (R-WA) Chairman of the House Natural Resources Committee, said “The President’s plan is to simply say ‘no’ to new energy production,”   to Interior Secretary Ken Salazar during a hearing pertaining to hydraulic fracturing.  “It’s a plan that is sending American jobs overseas, forfeiting new revenue, and denying access to American energy that would lessen our dependence on hostile Middle Eastern oil.”

The study will take up to six months to complete, and will probably somehow be extended until “after the election,” which seems to be the current program.  It doesn’t matter how safe the project is, how much studied, how thoroughly cleared — it can always be studied a little more, just to be sure.  Ohio is a crucial swing state.  The huge Utica oil shale deposit now has over one million acres under lease is likely to see some positive results in crude oil production, which would mean more jobs and more prosperity.  Environmental concerns are loud and public. Does energizing his environmental base outweigh ordinary Ohio voters?

One would not think that shutting down the Keystone XL pipeline and a potential 20,000 construction jobs would attract Ohio voters. The Wayne National Forest shutdown may affect only a few dozen up to 200 jobs according to the USDA, or the Ohio Oil and Gas Energy Education Program says that drilling in the Utica shale, which is affected by the suspension of the mineral lease would produce up to 204,500 jobs by 2015.

Lucian Pugliaresi, president of the Energy Policy Research Foundation, says in the Wall Street Journal, that we are:

in the early stages of sustained and large increases in domestic crude oil output from the same hydraulic fracturing technology that brought us the shale gas revolution. New crude supplies, combined with the current surge in natural gas production, offer the promise of a renaissance in long-moribund petrochemical processing and petroleum refining industries.The capital now sitting on the sidelines is ready to come off the bench and fund profitable projects.  But it will not be deployed if there’s a political risk that cannot be contained. (emphasis added)

Another example of the administration’s insistence that regulation plays no part whatsoever in job losses, flatly denied by events.

President Obama is determined to force Americans into his personal vision of an economy running on clean renewable energy. The most advanced solar panel  cannot compensate for the nature of solar energy itself. It is diffuse.  There is no sun at night, which comes very early this time of year, and when the skies are cloudy or even when clouds drift across the sun no solar energy.  That is the nature of the sun.  Wind is intermittent. It comes in puffs, gales, breezes, and no matter how tall, no matter how huge the arms or how easily they turn, they cannot overcome the nature of wind.

President Obama’s goal of moving us to a clean green economy seem dubious at best, and pointless at the practical level.  Attempting this when the economy is in the tank and so very many people are unemployed is both foolish and cruel.

Another Day, Another Bankruptcy. Too Bad, Taxpayers! by The Elephant's Child

And so it goes. Beacon Power has followed Solyndra into bankruptcy, potentially leaving taxpayers on the hook for $43 million. Beacon is a Massachusetts company that was highly praised by renewable power activists, and consequently got loan guarantees from the federal government. The company promised to build storage devices for the intermittent power produced by wind and solar facilities.

In 2005, Beacon’s shares traded for $47, in February 2011 the price was down to $3.44 and in late October the share price hit 11¢. One more proof on the long list of proofs that the government is just no good at picking winners and losers. When will they ever learn?

Venture capitalists pool money, their own and others, to invest in promising businesses. They do a whole lot of investigating and due diligence before they invest a penny, because if the business does not succeed, it’s their pooled money that is lost. So they are very, very careful.

Government has no such problems. Solyndra is a massive example. The government’s position —as enunciated by Obama — has been that when things are too risky for venture capitalists and private investors, then government must step in to bring the dream to fruition.  And since it’s all new and daring, then we must expect some failures along the way. But the dream is correct, and we must do everything possible to change the United States into a renewable energy country.  Is that what he meant by that hope and change stuff?

As more of the Solyndra debacle becomes public, the bigger the scandal becomes.  The company was urged by the Department of Energy to put off their bankruptcy filing until after the election.  The first thing the company did was build a state-of-the-art factory with all the amenities — no putzing around in a garage or even one of the empty industrial buildings so readily available in California with an economy in the tank. No locating in a state that is more friendly to business. Big bonuses for the executives, as taxpayers were cut out of recovering any cost from the sale of the facilities.

Beacon wants to keep its business running, according to company officials, so they apparently still believe, in spite of an inability to turn a profit.  Government is not qualified to pick private businesses in which to invest taxpayer money.

You’re Going to Lose Even More Than You Thought! by The Elephant's Child

You already knew this, didn’t you?  Yesterday the Treasury Department revised its estimate of how much taxpayers are going to lose on the bailout of Government Motors.  It’s not a pretty story. In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion, up from its previous estimate of $14.3 billion. This is largely due to the decline in GM’s stock price.

Taxpayers still own about a quarter of the company.  The government’s special bankruptcy package allowed write-offs that could add up to as much as $15 billion in tax savings that the company would not have had, had it gone through a normal bankruptcy.  So add another $15 billion, which would make the loss to taxpayers add up to about $38.6 billion.

GM has been doing quite well in China and North America with profit margins that are among the best in the industry at 10 percent.  Their new competitors are Hyundai and Kia who concentrate on the small car market and do not offer a full product line, so GM and Ford’s most profitable vehicles — the hated gas-guzzling SUVs and pickup trucks — are to a degree insulated from downward price pressure. But don’t breathe a sigh of relief just yet, the Obama administration wants Government Motors to change their product mix away from big greenhouse-gas emitting vehicles to money-losing hybrids and electric cars which could promptly put GM in a deeper hole.

Well, you put in an administration that has neither experience nor understanding of how business works and you end up with a strategy for the destruction of the American auto industry.  Obama, who seems to live in a different reality, has assured us that our investment in Government Motors would cost us “not a dime”.  He was recently in Michigan claiming that the “investment had paid off.” And now that the auto companies are rescued, it won’t be long, he said, before Detroit is back as well. Good luck with that one.

Well, Detroit is running out of money. Insolvency is coming up in April when they just plain run out of money. Their options are daunting.  Stephen Henderson lays out in  the Detroit Free Press just how dreadful Detroit’s problems are.

%d bloggers like this: